Business

U.S. axes trade benefits for India, Brazil

There could be consequences, says Kamal Nath

WASHINGTON: The United States is terminating some trade benefits for India, Brazil and other developing countries under a programme revamped late last year by Congress, the White House said on Thursday.

President George W. Bush issued a proclamation implementing the changes to the Generalized System of Preferences programme, which provided the U.S. duty-free access for $32.6 billion worth of goods from developing countries in 2006.

The decision came just one week after an acrimonious meeting in Potsdam, Germany, between the U.S., the EU, Brazil and India that failed to produce a long-awaited breakthrough in world trade talks.

U.S. officials accused the two leading developing countries of making impossible demands for cuts in U.S. farm subsidies, while refusing to substantially open their own markets to more U.S. farm and manufactured goods.

However, the action has its roots in a bill approved by Congress in December, which provided new guidelines for determining whether a particular product is eligible for duty-free treatment under the GSP programme.

Those reforms were motivated by frustration in Congress over Brazil and India’s role in the trade talks, and were aimed at eliminating GSP eligibility for products where developing countries had shown they could compete without assistance.

The decision announced on Thursday means Brazil will no longer be able to ship brakes, brake parts and ferrozirconium to the U.S. market without paying U.S. import duties, the U.S. Trade Representative’s office said in a statement.

The U.S. is also revoking the duty-free status for gold jewellery and brass lamps from India, methanol from Venezuela, wiring harnesses from the Philippines, gold jewellery from Thailand and kola nuts from Ivory Coast.

India shipped $1.6 billion in gold jewellery and $20 million in brass lamps to the U.S. under the GSP programme in the first ten months of 2006, the USTR said when it initiated its review last year.

Brazil shipped $242 million in brake and brake parts and $700,000 in ferrozirconium in the same period, the USTR said. Indian Commerce Minister Kamal Nath, who has been in Washington for talks with U.S. officials, said on Thursday that there could be consequences if the U.S. cut benefits. “We will take note ... if and when the moment comes. We’ll remember it wasn’t extended,” Mr. Kamal Nath said. The revamped GSP programme allows the Bush administration to revoke duty-free treatment when imports of a certain good from one country exceed an annual cap of about $187.5 million, or comprise 75 per cent of total U.S. imports of that good.

U.S. trade officials said they terminated eligibility for 21 products as a result of their review, but maintained eligibility for 115 exports from countries whose trade exceeded statutory limits in 2006. — Reuters

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